Rapaport Magazine
Markets & Pricing

Hong Kong


Holiday sales continue growth trend

An increase in foot traffic benefits Hong Kong retail businesses during the Chinese New Year season.

By Mary Kavanagh
The Year of the Dog appeared to get off to a good start in Hong Kong, with the number of mainland visitors to the city increasing more than 14% between February 15 and 18, according to the Hong Kong Immigration Department. Retail-sector lawmaker Peter Shiu Ka-fai said the growth in tourist numbers as compared with last year’s Chinese New Year period benefited retail businesses, with Sun Hung Kai Properties reporting a 13% rise in foot traffic and a 16% improvement in sales at its 12 malls from February 10 to 19.

Yet the cancellation of the annual Chinese New Year fireworks that had been scheduled for February 17, the second day of the Lunar New Year holiday, left many businesses concerned about sales. Hong Kong Chief Executive Carrie Lam called off the fireworks display following a bus accident in the city that claimed 19 lives and left several people injured. The display was due to take place on the seventh day after the tragedy — the point in time, according to Chinese tradition, when the spirit of a dead person returns home for a final farewell to loved ones. Yiu Si-wing, a tourism-sector legislator, said the cancellation had hurt business at restaurants, shops and hotels. Time will tell what the true impact of the cancellation has been.

Overall positive sentiment

The mood during the run-up to the most important annual holiday for locals was generally positive. Retail sales for 2017 returned to growth, recording an increase of 2.2% over the previous year and marking the end of a three-year decline. In December, retail sales climbed 5.8% in value and 4.3% in volume year on year. Thomson Cheng, chairman of the Hong Kong Retail Management Association (HKRMA), reported that association members were generally upbeat about retail performance in the first two months of 2018 and forecast an increase in sales of 5% to 6% for January and February.

Nancy Liu, head of Forevermark Diamond Jewelry, Asia Pacific, reported “healthy and steady growth in jewelry sales in the last two quarters of 2017 compared to the previous year,” forecasting a modest uptrend in the coming months.

“With Valentine’s Day on February 14 followed so closely by Chinese New Year on February 16, we are inclined to be more conservative on sales, because most people will be busy enjoying the Chinese New Year festivities with family in their hometowns for a longer period, thus diluting shopping traffic,” said Liu.

Millennial buying habits

Millennials’ diamond-jewelry buying habits in China, which differ from those of their parents’ generation, are driving the market, according to Liu. “China is predominantly a bridal market for diamond jewelry. Still a very fragmented market in tier-three and tier-four cities, consumption is driven by bridal solitaires. We see a trend to upsell from below 20 points to 30 points and even larger sizes as millennials are spending more on diamond jewelry, which previously did not account for a major portion of their wedding-jewelry spending.

“In tier-one and tier-two cities, we see an increase in the trend toward self-purchase, with more and more millennials looking for unique designs. They get their first piece of diamond jewelry from gifting or self-reward, rather than from marriage. A round brilliant cut is still the most sought-after stone, although fancy shapes are gaining traction. In terms of design categories, jewelers are incorporating more pendants and both half and full eternity rings to embrace this change and meet millennials’ needs,” Liu said.

Article from the Rapaport Magazine - March 2018. To subscribe click here.

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